HomeLive CommentsECB Lane: Inappropriate to leave deposit rate at current 3%

ECB Lane: Inappropriate to leave deposit rate at current 3%

ECB Chief Economist Philip Lane revealed in an interview with French newspaper Le Monde that the central bank will likely raise interest rates again at their May 4 meeting, stating, “This is still not the right time to stop.” While Lane did not specify the rate hike’s magnitude, he said that “it would be inappropriate to leave our deposit rate at the current level of 3%.”

Lane acknowledged the decline in Eurozone inflation from 10.6% last October to 6.9% in March as a positive development, easing pressure on living costs. He expects inflation to continue falling due to supply chain bottleneck improvements and the reversal of the energy situation. However, Lane stressed that the most crucial aspect for central banks is “making sure that we get close to our target of 2% within a reasonable time period.”

Lane does not believe the current situation resembles the 1970s-style persistent inflation, but he cautioned against the risk of ending up in such a scenario. Lane underlined the importance of ECB raising interest rates to ensure a “timely” return to the 2% inflation target. Regarding the European economy, he noted that while it is not stagnant, it follows a more modest path than expected prior to the pandemic and the Russian war against Ukraine.

Full interview of ECB Lane here.

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